PRODUCT LOCATION CHOICE AND FIRM CAPABILITIES: EVIDENCE FROM THE U.S. AUTOMOBILE INDUSTRY.

We test theories of product differentiation and firm capabilities using data from the U.S. automobile industry. We find managers introduce new models close to their existing ones but far from rival models. We also find entrants and foreign manufacturers locate models closer to rival models. These results are consistent with both economic models of product differentiation and theories of firm capabilities. [ABSTRACT FROM AUTHOR]